Newly released data from the Society of Motor Manufacturers and Traders shows that output in January was down 0.3% to 128,620 cars compared to the same month in 2013.

John Leech, KPMG’s UK head of automotive, said: ‘UK car production in January 2014 was flat but recent launches of cars made in Britain such as the Nissan Qashqai, BMW Mini and Range Rover Sport bode well for the UK industry. The SMMT forecasts that vehicle production will grow from 1.5 million in 2013 to over 2.0 million in 2017. 

‘A key question vexing the industry and government is whether this will percolate down into jobs growth in Britain’s 2,000 supply chain companies. In the 1990s and 2000s the UK automotive supply chain was ravaged and the proportion of parts sourced from UK suppliers dropped to as low as 35%. Eighteen months ago, the Automotive Council highlighted that there was £3 billion of unfulfilled opportunity for UK suppliers, which has undoubtedly increased substantially since then. This has prompted recent investments from companies such as GKN, TRW, Lear, Borg Warner and Nifco raising optimism that the proportion of parts sourced from UK suppliers is likely to rise above 40% by 2017. The increase in supply should translate into jobs growth measured in the tens of thousands by 2017.’

He concluded: ‘We are seeing a substantial upsurge of interest by potential investors in the UK automotive supply chain the like of which we haven’t seen for several decades. Investors are principally overseas automotive suppliers but we are seeing interest from private equity and companies from closely related sectors too. All in all, the outlook for the UK car industry looks bright.’